The War of Notary Publics: Executive Summary

Do you know what would happen if Peru lost the war over state reform?

The War of Notary Publics

Executive Summary

1. WHY ARE NOTARY PUBLICS AGAINST THE DEMOCRATIZATION OF PROPERTY AND BUSINESS?

Until the last Board of Directors, the inner circle that controlled the Association of Notary Publics of Lima relentlessly conspired to maintain the status quo and to block the reforms proposed that would enable the poor to access the legal ownership of their property and business. This Association had been struggling to defend its monopoly, that is, the privilege that notaries have of charging handsome sums of money to bear witness to asset-based transactions —without providing any safety— at a cost that only the well-to-do can afford.

True to their tradition of defending legal norms that benefit only a minority, over the past twenty years notaries have continuously attacked the reforms that benefit the poor. The last attack adopted the ruse of paying an economist to distort the reforms that affect their direct interests and to discredit the ILD, the institution they consider to be at the root of such reforms. Legislative Decree 495 and 496 enacted by President Allan García in 1988 and the last reforms for administrative simplification in favour of the excluded issued in 2005 2006.

2. WHY DO NOTARIES OBSTRUCT THE ECONOMIC USE OF PROPERTY?

An asset can only acquire added value if it is put in circulation. In order to generate value and wealth the asset must be taxable for loans and liquidity, its sale, rent, be divisible to accept partners and open to investment, or be represented in titles or for using it for any other purpose as a means of generating a economic income for the owner.

Many obstacles raised by the notaries' inner circle in addition to numerous other loopholes in the Peruvian legal system obstruct the poor from mobilizing and adding value to their assets. The high costs of public notary services, their overwhelming presence in all matters involving red tape procedures, the excessive professional qualifications in order to be admitted as a candidate to become a notary public, their number (limited and closed), their fees and collections, their lack of accountability for the truth of the contents of the facts that they bear witness to and certify (see example in Annex 2), the finger pointing distribution of opportunities in the association of notaries itself, their hunting grounds in addition to a captive territorial market hampers the poor from using their assets in order to generate wealth.

3. WHAT IS THE CONSEQUENCE OF THE CURRENT MODUS OPERANDI OF NOTARY PUBLICS?

The efforts deployed by notary publics, their lobbies before Congress, attacks on those who advocate the reform of the system as well as the sabotage of reforms that allow the poor to access the legal ownership of their property and businesses lies entangled and buried in the basements of the ministries and have resulted in the following:

Less investment (p.19)

Worse housing (p.19)

Lower rate of school attendance (p.21)

Fewer job opportunities for women (p.21)

Less birth control (p.21)

Less access to credit (p.23)

Less access to electricity and drinking water (p.24)

Worse performance of the civil defence system and greater impact of natural disasters (p.25)

Less access to insurance (p.31)

Lower public safety (p.32)

Lower household income-generating capacity (p.34)

Fewer formal jobs (p.34)

Lower tax collection (p.35)

Lack of information and safety to access national and international markets (p.35)

More social exclusion (p.36)

4. WHY DID THE PUBLIC NOTARIES REACT THE LAST TIME?

Over the last year the Executive Branch and Congress have taken a series of measures to democratize the legal ownership of property and business and to restrict the monopolist privileges of notary publics. In reaction, the Notary Publics tried to block the enforcement of these measures and in doing so, thought that the ILD would be an easier target than the authorities. The notaries think that the ILD is the only driving force behind these reforms and overlook the fact that lately society at large has become increasingly aware of the need to implement them.

As a promoter of reform, the ILD is accustomed to arousing criticism and being under fire, a reaction we usually consider to be natural scholarly discrepancy and fair play. But, in this case, we have decided to answer the profit-driven mock defense set up by the former Board of Directors that supported a regime that actually excluded the poor.

5. HOW CAN WE HELP TO EXPAND THE SERVICES OF ITS MEMBERS AND MAKE POPULAR TRANSACTIONS SAFER SO THAT THE USERS AND NOTARY PUBLICS ALIKE CAN INCREASE THEIR WEALTH?

Notary public duties need to be modernized to enable them to generate a considerable value by helping to identify individuals, regularize property and constructions, resolve conflicts, process non-litigious cases, enforce contracts and liabilities, simplify administrative procedures, and act as an alternative to cumbersome legal processes in addition to reducing the costs of legal transactions, amongst others. Public Notaries should address these matters and not hamper the access of the poor to property and business ownership.

Moreover, the younger generation of notaries should be given more opportunities. This includes relaxing the requirements to act as notary thereby enabling all public notaries to efficiently compete against each other and not make the income level of a notary depend his or her seniority or geographical location as has been the case.

Let us not forget that until a few decades ago the leading Notary Publics enjoyed a lifelong appointment and a hereditary status. Despite the fact that notaries associations have evolved over the years they have not kept pace with the major technological breakthroughs of the end of the XXth century and the beginning of the XXIst. Undoubtedly, this is partially due to the fact that such associations cling to feudal practices and institutions, but specially because these are rooted in the old traditions of the cabildeo currently known as lobbying, political favours and an income-based approach.

If new perspectives continue to be ignored awareness will grow about the possibility of challenging the performance of notary publics since this is contrary to free competition and therefore any citizen could be justified in filing a claim in keeping with Peruvian and international laws on grounds of free competition and human rights as has happened at the United Nations, the European Union and other developed regions.